现金流量表英文版ch07 statement of cash flows.pptx

Chapter 7Statement of Cash flowsIAS 7 11. Main definitions:nCash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes in value.nGuidance notes indicate that an investment normally meets the definition of a cash equivalent when it has a maturity of three months or less from the date of acquisition.2nEquity investments are normally excluded, unless they are in substance a cash equivalent (e.g. preferred shares acquired within three months of their specified redemption date).nBank overdrafts which are repayable on demand and which form an integral part of an enterprises cash management are also included as a component of cash and cash equivalents. 32. Presentation of the Statement of Cash FlowsnCash flows must be analysed between operating, investing and financing activities. nOperating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities.nInvesting activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.nFinancing activities are activities that result in changes in the size and composition of the equity capital and borrowings of the enterprise.11 4Examples of cash flows from operating activities are:n(a) cash receipts from the sale of goods and the rendering of services;n(b) cash receipts from royalties, fees, commissions and other revenue;n(c) cash payments to suppliers for goods and services;n(d) cash payments to and on behalf of employees;11 5Examples of cash flows arising from investing activities are:n(a) cash payments to acquire property, plant and equipment, intangibles and other long-term assets. These payments include those relating to capitalised development costs and self-constructed property, plant and equipment;n(b) cash receipts from sales of property, plant and equipment, intangibles and other long-term assets;n(c) cash payments to acquire equity or debt instruments of other enterprises and interests in joint ventures;n(d) cash receipts from sales of equity or debt instruments of other enterprises and interests in joint ventures;n(e) cash advances and loans made to other parties (other than advances and loans made by a financial institution);n(f) cash receipts from the repayment of advances and loans made to other parties (other than advances and loans of a financial institution);11 6Examples of cash flows arising from financing activities are:n(a) cash proceeds from issuing shares or other equity instruments;n(b) cash payments to owners to acquire or redeem the enterprises shares;n(c) cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short or long-term borrowings;n(d) cash repayments of amounts borrowed; andn(e) cash payments by a lessee for the reduction of the outstanding liability relating to a finance lease.11 7Interest and Dividendsninterest and dividends received and paid may be classified as operating, investing, or financing cash flows, provided that they are classified consistently from period to period11 8Taxes on Incomencash flows arising from taxes on income are normally classified as operating, unless they can be specifically identified with financing or investing activities 11 93. DisclosurenInvesting and financing transactions which do not require the use of cash should be excluded from the statement of cash flows, but they should be separately disclosed elsewhere in the financial statements. nThe components of cash and cash equivalents should be disclosed, and a reconciliation presented to amounts reported in the statement of financial position.nThe amount of cash and cash equivalents held by the enterprise that is not available for use by the group should be disclosed, together with a commentary by management.11 104. Methods of preparing statement of cash flowsnFor operating cash flows, the direct method of presentation is encouraged, but the indirect method is acceptable 11 11direct methodnThe direct method shows each major class of gross cash receipts and gross cash payments. The operating cash flows section of the statement of cash flows under the direct method would appear something like this: nCash receipts from customers xx,xxxnCash paid to suppliers xx,xxxnCash paid to employees xx,xxxnCash paid for other operating expenses xx,xxxnInterest paid xx,xxxnIncome taxes paid xx,xxxnNet cash from operating activities xx,xxx12indirect methodnThe indirect method, whereby net profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.13nThe operating cash flows section of the statement of cash flows under the indirect method would appear something like this: nProfit before interest and income taxes xx,xxxnAdd back depreciation xx,xxxnAdd back amortisation of goodwill xx,xxxnDecrease in receivables xx,xxxnDecrease in inventories xx,xxxnIncrease in trade payables xx,xxxnInterest paid xx,xxxnIncome taxes paid xx,xxxnNet cash from operating activities xx,xxx14 n show the ability to generate cashncash is more comprehensive than profitncreditors are satisfiedna better means of comparing resultsnsatisfies the needs of all users betterneasier to preparencan be audited easierneasier to be understoodnprovide more informationnforecasts can be compared with actual cash flows11 The advantages of statement of cash flows15